Edward Conard

Top Ten New York Times Bestselling Author

  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Tuesday, September 23, 2025

AI Summary. Slowed private equity distributions mean that at the current pace it would take roughly nine years for investors to get their money back from the more than 12,000 companies held by US buyout funds, according to Pitchbook. Nearly two-thirds of private equity clients say they would prefer traditional sales even below internal valuations, with only 17% favoring continuation funds.

Allison McNeely, Preeti Singh, and Laura Benitez Bloomberg
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Fewer exits from buyout funds have “slowed fund distributions so dramatically that, at the current rate, it would take about nine years” for US buyout fund LP’s to collect their money from the more than 12,000 companies held by US buyout funds.

How long will private equity investors wait to recover capital?

Core argument: At the current distribution rate, it would take about nine years for limited partners to collect their money from the more than 12,000 companies held by US buyout funds, according to PitchBook.

The snags have slowed fund distributions so dramatically that, at the current rate, it would take about nine years for customers [of buyout funds] to collect their money from the more than 12,000 companies held by US buyout funds, according to Pitchbook. That’s making clients — known as limited partners — reluctant to pony up fresh capital at a time when Bain & Co. estimates more than 18,000 private capital funds are seeking $3.3 trillion. Almost two-thirds of private equity clients would prefer to see sponsors exit investments through traditional sales, even at a price below where the firm had internally valued the assets, according to a survey conducted by Bain. Only 17% of LPs viewed continuation vehicles as a preferred solution for liquidity.

Takeaways by Macro Roundup® AI

  1. At the current distribution rate, it would take about nine years for limited partners to collect their money from the more than 12,000 companies held by US buyout funds, according to PitchBook.
  2. Bain & Co. estimates more than 18,000 private capital funds are seeking $3.3 trillion, even as slowed distributions make limited partners reluctant to commit fresh capital.
  3. Almost two-thirds of private equity clients would prefer sponsors exit investments through traditional sales, even below internal valuations, while only 17% of limited partners viewed continuation vehicles as a preferred liquidity solution, according to a Bain survey.

Related Articles:

  • Private Equity Fundamentals — An analysis of North American private equity- and venture-backed companies with public stock or debt finds they trade at 22.4x adjusted earnings, in line with small-cap growth stocks, but at 33.4x on standard accounting measures with net debt of 8.8x earnings. The authors describe the group as heavily leveraged and mostly cash-flow negative.
  • Private Equity Operational Improvements — Companies acquired by private equity firms average operating profit margins 0.5% above their industry in the three years before the deal, drop in the transaction year, and afterward recover only to the industry average. The authors argue this pattern reflects buying higher-performing companies that mean-revert rather than post-deal efficiency gains.
  • It’s Mostly a Paper Moon: Alternative Investments Review — Venture capital financing has tightened: the median time between funding rounds has lengthened, more startups have shut down through bankruptcy, and the share of "down rounds" — new financing at a lower valuation — rose from 8% to nearly 20%, with those rounds cutting post-money valuations by more than 50%.

AI Summary. The US government collects tariffs at an annualized rate of about $350bn, equal to 18% of annual household income tax payments.

Torsten Sløk Apollo
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Torsten Sløk reports, “The US government currently collects ~$350B in tariffs at an annualized rate, corresponding to 18% of annual household income tax payments.”

How much revenue do tariffs collect relative to income taxes?

Core argument: The US government collects tariffs at an annualized rate of about $350 billion, an amount described as very significant.

The US government currently collects about $350 billion in tariffs at an annualized rate, which corresponds to 18% of annual household income tax payments. The bottom line is that the amount of money collected in tariff revenue is very significant.

Takeaways by Macro Roundup® AI

  1. The US government collects tariffs at an annualized rate of about $350 billion, an amount described as very significant.
  2. Annualized US tariff collections of roughly $350 billion equal 18% of annual household income tax payments.

Related Articles:

  • Tariffs Are Generating Meaningful New Revenue — New U.S. tariffs are estimated to generate $1.3tn in net new revenue through the end of the current presidential term and $2.8tn through 2034 before economic effects, about $600bn more than previously enacted tariffs. If a court ruling striking down some tariffs is upheld, the remainder could raise as little as $800bn through 2034.
  • Trump Signals Imminent Supreme Court Appeal to Protect Tariffs — The U.S. Court of Appeals for the Federal Circuit ruled 7-4 that the International Emergency Economic Powers Act — a statute that primarily authorizes sanctions and does not mention tariffs — was unlikely to have been intended by Congress to grant the president nearly unlimited tariff authority. The White House is preparing a Supreme Court appeal.
  • Tariffs are Dumb Enough to (Almost) Work — A universal 15% tariff on imported goods could raise roughly $300–$400bn annually, a fraction of what a value-added tax would generate but real revenue given U.S. imports of about $4tn. The author argues tariffs are a poorly designed form of consumption tax that could build political groundwork for replacing them with a more efficient value-added tax.

AI Summary. China's trade surplus, nearly $1tn, is on track for a record $1.2tn as exports continue despite steep US tariffs, according to Bloomberg calculations. With US access curtailed, Chinese manufacturers have redirected shipments to India, Africa and Southeast Asia, prompting alarm among governments weighing damage to domestic industries against antagonizing Beijing.

Bloomberg Staff Bloomberg
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Bloomberg estimates that China’s trade surplus will reach a record $1.2T in 2025, ~ 20% above its 2024 surplus of just under ~$1T.

Are US tariffs redirecting Chinese exports to other markets?

Core argument: China's trade surplus reached almost $1 trillion last year and is on track for a record $1.2 trillion in 2025, according to Bloomberg calculations, despite five months of sky-high US tariffs.

China’s trade surplus last year was almost $1 trillion and is on track to exceed that in 2025, based on Bloomberg calculations. President Xi Jinping’s export engine has proved unstoppable during five months of sky-high US tariffs, sending China toward a record $1.2 trillion trade surplus. With access to the US curtailed, Chinese manufacturers have shown they aren't backing down: Indian purchases hit an all-time high in August, shipments to Africa are on track for an annual record and sales to Southeast Asia have exceeded their pandemic-era peak. That across-the-board surge is causing alarm abroad, as governments weigh the potential damage to their domestic industries against the risk of antagonizing Beijing — the top trading partner for over half the planet. While so far only Mexico has hit back publicly this year — floating tariffs as high as 50% on Chinese products including cars, auto parts and steel — other countries are coming under increasing pressure to act.

Takeaways by Macro Roundup® AI

  1. China's trade surplus reached almost $1 trillion last year and is on track for a record $1.2 trillion in 2025, according to Bloomberg calculations, despite five months of sky-high US tariffs.
  2. With access to the US curtailed, Chinese exports have surged elsewhere: Indian purchases hit an all-time high in August, shipments to Africa are on track for an annual record, and sales to Southeast Asia have exceeded their pandemic-era peak.
  3. Mexico is the only country to hit back publicly this year, floating tariffs as high as 50% on Chinese cars, auto parts and steel, while other governments weigh damage to domestic industries against antagonizing Beijing, the top trading partner for over half the planet.

Related Articles:

  • The Trump Shock That Wasn’t (At Least Not Yet) — Excluding pharmaceuticals and gold — categories where trade is distorted by tax treatment and stockpiling ahead of tariffs — U.S. trade flows look largely normal despite tariff increases. Imports from China fell sharply, but imports from Taiwan and Southeast Asia rose, with electronics imports up on data center investment, leaving total Asian imports little changed.
  • Trade With China Is Becoming a One-Way Street — China's import volumes have shown no growth since the end of 2022 while its export volumes rose 33%, according to data from the Netherlands Bureau of Economic Policy Analysis. In dollar terms, Chinese imports fell 11% from the US, 17% from Japan, and 18% from Germany, as Chinese companies replace overseas suppliers with domestic ones.
  • China Emerges From Trade Chaos With Record Exports, Surplus — China posted a record half-year trade surplus of about $586bn, with exports up 5.8% year-over-year to $325bn and imports up 1.1%. Shipments to the US fell 16.1% from a year earlier, while exports to the 10 Southeast Asian nations in the Asean group rose 17%.

AI Summary. China installed 277 gigawatts of wind and solar capacity in seven months, roughly four times the utility-scale additions U.S. federal analysts project for all power sources over a full year. Chinese firms' global market share in batteries and solar modules has reached 75% or higher, according to BloombergNEF.

David Uberti, Ed Ballard, and Brian Spegele Wall Street Journal
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So far this year, China has installed 277 gigawatts of wind and solar capacity, 4x the scale of “utility-scale additions,” via all power sources the US will bring online in 2025. Chinese firms now have a ~75% market share in clean energy manufacturing.

Is China outpacing the US in clean-energy buildout and manufacturing?

Core argument: China installed 277 gigawatts of wind and solar capacity in the first seven months of the year, quadruple the utility-scale additions U.S. federal analysts project across all power sources for 2025, which could give China a big advantage in the power-hungry AI race.

China installed 277 gigawatts of wind and solar capacity in the first seven months of the year, quadruple the utility-scale additions federal analysts in the U.S. project across all power sources for 2025. That could give China a big advantage in the power-hungry AI race. Chinese companies have also stepped up manufacturing capacity of batteries and solar modules, pumping out exports. Their global market share for those technologies has swelled to 75% or higher, according to BloombergNEF. Countries across the world “are going to be even more reliant on Chinese technology to power their economies, to make the cars they drive,” said Wally Adeyemo, who was deputy Treasury secretary under President Joe Biden. “It creates real chokepoints for China.”

Takeaways by Macro Roundup® AI

  1. China installed 277 gigawatts of wind and solar capacity in the first seven months of the year, quadruple the utility-scale additions U.S. federal analysts project across all power sources for 2025, which could give China a big advantage in the power-hungry AI race.
  2. Chinese global market share in batteries and solar modules has swelled to 75% or higher, according to BloombergNEF, as Chinese companies expanded manufacturing capacity and exports of those technologies.
  3. Wally Adeyemo, deputy Treasury secretary under President Joe Biden, said countries worldwide will be even more reliant on Chinese technology to power their economies and make the cars they drive, creating real chokepoints for China.

Related Articles:

  • How Xi Sparked China’s Electricity Revolution — Electricity has risen to 30% of China's final energy use while plateauing near 22% in Europe and the US, supported by a decades-long grid expansion and upgrade program projected to cost as much as $800bn by 2030. Chinese grid investment is forecast to grow about 5% annually through 2030, faster than projected economic growth.
  • How China Curbed Its Oil Addiction—and Blunted a U.S. Pressure Point — Nearly half of passenger vehicles sold in China last year were all-electric or plug-in hybrids, up from 6% in 2020, while domestic oil output rose 13% from 2018 to 2024 to about 4.3m barrels a day. China still imports roughly 11m barrels a day, about 70% of what it consumes.
  • The Real China Model — China generates more electricity annually than the United States and European Union combined, having added capacity equivalent to the United Kingdom's total supply each year. Electricity makes up nearly 30% of China's energy use, versus 22% in the US and 21% globally, and its share is growing about 6% a year.

AI Summary. An economist projects that within 50 years technological advances will roughly double the average American's inflation-adjusted income, while substantial inequality persists. The forecast also anticipates a more robust safety net including a modest universal basic income, higher taxes and a value-added tax, shorter work weeks, and fewer heavy-handed market interventions.

Greg Mankiw Wall Street Journal
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Looking fwd 50 years, Mankiw forecasts “heavy handed” state intervention in competitive US markets (such as industrial policy, tariffs and minimum wages) will decline, arguing “The arc of the economic universe is long, but it bends toward efficiency.”

How will technology, taxes, and the safety net reshape American capitalism?

Core argument: One contributor projects that technological advances will roughly double the average American's inflation-adjusted income within 50 years, while substantial inequality persists and populist agitators continue to argue that elites have rigged the economy.

If I squint, some patterns for the U.S. economy 50 years from now take shape. Thanks to advances in technology, the income of the average American, adjusted for inflation, will be about twice what it is today. Substantial inequality will persist, and populist agitators will continue to argue that the elites have rigged the economy. Partly as a response, the social safety net will become more robust, including a modest universal basic income. Taxes will be higher to fund the expanded safety net, and because people will have learned that government debt relative to GDP cannot rise forever. Like most of the world today, the U.S. will have a value-added tax. Work weeks will be shorter due to both the disincentive effect of higher taxes and the desire of most people to use their greater prosperity to enjoy more leisure. Acknowledging past mistakes, the government will eschew most heavy-handed interventions in competitive markets, such as industrial policy, tariffs, minimum wages, rent control and Nimby zoning. These developments will be deemed desirable by most of the public and economists at the time. To paraphrase Martin Luther King Jr., if he were an economist: The arc of the economic universe is long, but it bends toward efficiency.

Takeaways by Macro Roundup® AI

  1. One contributor projects that technological advances will roughly double the average American's inflation-adjusted income within 50 years, while substantial inequality persists and populist agitators continue to argue that elites have rigged the economy.
  2. The projection includes a more robust social safety net with a modest universal basic income, funded by higher taxes and a value-added tax, partly because people will have learned that government debt relative to GDP cannot rise forever.
  3. Work weeks are forecast to shorten, reflecting both the disincentive effect of higher taxes and a desire to spend greater prosperity on leisure, with government eschewing industrial policy, tariffs, minimum wages, rent control and Nimby zoning.

Related Articles:

  • The Fiscal Future — US debt is on an upward trajectory, and the author argues that extraordinary growth, default, money creation, and spending cuts are each implausible or unacceptable, leaving large tax increases. US governments collect about 28% of GDP in taxes versus 35% in the UK and 46% in France, and a value-added tax could close the roughly 4%-of-GDP fiscal gap.
  • Living with High Public Debt — High public debt ratios are likely to persist because large sustained primary budget surpluses are politically unrealistic, real interest rates are already very low, faster global growth is hard to engineer, inflation is not a sustainable route to reducing debt, and financial repression is less feasible amid liberalized markets.
  • Life Under Two: Debt, Deficits, and the AI Discontinuity — The United States averaged annual GDP growth above 3% for decades, but 2% or less is now more likely. Over ten years, the author estimates that gap amounts to a $3.36tn larger economy, $3.7tn more tax revenue, and 6m more jobs, shifting public psychology from abundance toward scarcity.

AI Summary. Inflation-adjusted US public transit bus prices show almost no trend by bus type, with electric buses holding slightly above $1m, hybrids around $850,000, and diesels near $500,000 — the same level as in 1983.

Léa Bou Sleiman, Edward Glaeser, Julia Shephard, and Samantha Silverberg American Enterprise Institute
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In the US, prices of private vehicles have dropped 40% (quality adjusted) since 1995, but costs of US-produced transit buses have remained flat, exceeding foreign prices. A duopoly in manufacturing, customization, and “Buy America” rules keep costs high.

Have inflation-adjusted public transit bus prices changed over time?

Core argument: The median inflation-adjusted price of a US electric transit bus has hovered slightly above $1 million across the period covered, showing almost no trend despite rapid improvements in electric vehicle technology.

Our data [shows] US buses are expensive. The prices are corrected for inflation to 2024 dollars. There is almost no trend in any of the median prices within bus type. The median price of an electric bus hovers slightly above $1 million through-out this period, which may be surprising given the rapid improvements in electric vehicle technology. (A counterargument is that the improvements in the technology led to rising prices, but the same does not hold for heavy-duty electric vehicles.) The cost of a hybrid bus rose until 2015 but has remained relatively constant since then at about $850,000. Diesel buses hover around $500,000, just as in 1983, when New York bought 325 buses from General Motors.

Takeaways by Macro Roundup® AI

  1. The median inflation-adjusted price of a US electric transit bus has hovered slightly above $1 million across the period covered, showing almost no trend despite rapid improvements in electric vehicle technology.
  2. Median US diesel bus prices, in 2024 dollars, sit around $500,000 — the same level as in 1983, when New York bought 325 buses from General Motors.
  3. Median hybrid bus prices rose until 2015 and have remained relatively constant since then at about $850,000.

Related Articles:

  • The Stationary Bandits of New York City — New York City's construction costs exceed international benchmarks: Paris installs metro platform edge doors for about €3.7m per station while the Metropolitan Transportation Authority says it needs $55m per station. The author argues stringent crane operator licensing and sidewalk shed regulations protect a small number of unionized contractors from competition.
  • Transit Costs Project — Five of the world's six most expensive subway lines are in New York City, where subway construction averages $1.5bn per km, far above global norms. The costs are attributed to complex regulation, labor expenses, and logistical challenges in a dense urban setting.
  • Economic Perspectives on Infrastructure Investment — US infrastructure projects cost more than international counterparts, averaging $1,601m per mile versus a global average of $478m, with a median of $965m per mile compared with $299m outside the US. Contributing factors include complex project designs, regulatory delays, elevated labor costs, and procurement and project management inefficiencies, while land costs are a minor component.

Wednesday, September 24, 2025

AI Summary. Long-term government bond yields have risen in the US and globally, while the dollar has stayed broadly stable against other major currencies even as gold prices rise. The authors argue this pattern signals debasement of fiat currencies against gold, driven by a crisis of confidence as high government debt and deficits raise incentives to inflate away obligations.

Robin Brooks Robin Brooks Substack
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Since Powell’s Jackson speech, gold has risen 13% while the dollar has remained stable against G10 currencies in a broad debasement of advanced economies’ currencies relative to gold.

Does rising gold with a stable dollar signal fiat currency debasement?

Core argument: The 30-year U.S. Treasury yield has resumed rising, pushing up 30-year yields globally including France's, which the author argues has the makings of a global debt crisis.

Longer-term bond yields are resuming their rise. As the left chart above shows, the 30-year Treasury yield has risen (blue line), which has pushed up 30-year yields globally, including for France (red line). All this has the makings of a global debt crisis. The Dollar has been stable against G10 currencies. Even as markets priced additional Fed cuts after Jackson Hole, the Dollar has been broadly stable, as the right chart shows (blue line). The fact that the Dollar is stable even as gold prices rise (black line, right chart) signals debasement of fiat currencies against gold. With government debt and deficits at alarming levels all over, investors are scrambling for safe havens. The continued rise in gold prices - as markets scale back expectations for Fed cuts and with the Dollar stable - is highly unusual. One possible explanation is that we’re seeing a crisis of confidence in fiat currencies, as fiscal imbalances in many places raise the incentive for governments to inflate away debt.

Takeaways by Macro Roundup® AI

  1. The 30-year U.S. Treasury yield has resumed rising, pushing up 30-year yields globally including France's, which the author argues has the makings of a global debt crisis.
  2. The Dollar has been broadly stable against G10 currencies even as markets priced additional Fed cuts after Jackson Hole, while gold prices have continued to rise, which the author reads as debasement of fiat currencies against gold.
  3. With government debt and deficits at alarming levels across countries, investors are scrambling for safe havens, and one possible explanation offered is a crisis of confidence in fiat currencies as fiscal imbalances raise governments' incentive to inflate away debt.

Related Articles:

  • Fiscal Risk from Rising Bond Yields — US interest rates fell for roughly 40 years before the pandemic, allowing maturing high-coupon debt to be refinanced at lower rates and keeping federal interest expense manageable even as debt rose. Because Congressional Budget Office projections assume the 10-year Treasury yield drifts down to 3.8% from about 4.1%, the author argues its debt-service projections face upside risk.
  • Gold Surpasses Inflation-Adjusted Record High Set in 1980 — Gold's spot price reached an all-time high of $3,674.27 an ounce, surpassing the inflation-adjusted peak set when gold topped out at $850 in January 1980. That earlier peak came amid a collapsing US currency, an inflation spike, and a recession.
  • Global Debt Report 2025 — About 60% of fixed-rate government debt in advanced economies maturing by 2027 — roughly $9tn — was issued before the recent interest-rate tightening, with weighted average yields below 2% versus projected 10-year rates near 3.6%, implying refinancing at nearly double the original cost. France, Spain, the UK, and the US face heightened vulnerability, with maturing debt exceeding 15% of GDP.

AI Summary. Measured in gold — dividing the S&P 500 by the gold price — US stocks have lost ground this decade, as bullion outperforms a booming equity market. The article argues central banks' efforts to reduce reliance on the dollar, including China's offer of Shanghai as a gold storage venue, are driving gold demand.

John Authers Bloomberg
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Since January, gold is up 42.4%, experiencing its strongest rally since 1979. John Authers argues the rally “seems to be driven by rational calculations of central banks,” suggesting it’s sustainable.

Are US stocks losing ground when measured in gold?

Core argument: The S&P 500 has lost ground this decade when measured in gold, as dividing the index value by the bullion price shows a decline even as US stocks boomed in dollar terms.

Look at the S&P 500’s performance so far this decade in terms of bullion (by dividing the index value by the gold price) and stocks have actually lost ground. How is gold managing to outperform the booming US stock market? An answer is that US shares are only doing so well because of monetary debasement. It’s true that the Federal Reserve cut its target rate last week, and that money supply is rising again. But neither of those events comes as a particular surprise. Politics may be the greatest factor. Shaken confidence in the US hasn’t dented the performance of American stocks this year, but countries’ attempts to build a Plan B to reduce their reliance on the dollar could now be showing up in demand for gold. China’s decision to start offering Shanghai as an alternative venue for central banks to store their gold may be more symbolic than anything else. But it tends to underscore that any adaptation of the world financial system will mean more demand for gold. If 1979 was about a somewhat irrational panic over inflation, this latest rally seems to be driven by the more rational calculations of central banks. It might last longer.

Takeaways by Macro Roundup® AI

  1. The S&P 500 has lost ground this decade when measured in gold, as dividing the index value by the bullion price shows a decline even as US stocks boomed in dollar terms.
  2. One explanation for gold's outperformance is monetary debasement, though the Federal Reserve's rate cut and the renewed rise in money supply came as no particular surprise.
  3. Politics may be the greatest factor behind gold's rally, as countries' attempts to build a Plan B reducing dollar reliance could be showing up in gold demand, with China offering Shanghai as an alternative storage venue for central banks.

Related Articles:

  • De-Dollarization? Diversification? Exploring Central Bank Gold Purchases and the Dollar’s Role in International Reserves — Central banks' gold accumulation is generally not associated with reducing the dollar's share of international reserves at the country level, apart from a few prominent cases, and is more consistent with modest overall diversification. Gold's role as an official-sector store of value has grown, but its use as a unit of account and medium of exchange remains limited.
  • Taking Stock: Dollar Assets, Gold, and Official Foreign Exchange Reserves — Gold accounts for about 10% of aggregate official foreign exchange reserves, roughly its level in the early 2000s. International Monetary Fund country data indicate most added official gold holdings came from a few central banks, with over half of reported accumulation from China and Russia and about a quarter from several emerging markets.
  • Gold Overtakes Euro as Global Reserve Asset, ECB Says — Gold has overtaken the euro as a global reserve asset, with central bank gold holdings reaching 36,000 tons, near the mid-1960s peak of 38,000 tons, helped by a 30% rise in the gold price. The European Central Bank finds countries geopolitically close to China and Russia accumulated gold more than others.

AI Summary. Data center construction spending has eclipsed office construction, and the specialized power rates most data centers pay fall short of covering the cost of a new natural gas plant, leaving other customers to bear part of the bill. In the PJM grid region, data center demand accounted for 70% of the increase in electricity costs over the past year.

Michael Cembalest JP Morgan
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Since the launch of ChatGPT in November 2022, AI related stocks have accounted for 75% of S&P 500 returns, 79% of earnings growth, and 90% of capital spending (Capex and R&D) growth.

Are other electricity customers paying part of data centers' power costs?

Core argument: In the PJM region, 70% of last year's increased electricity cost resulted from data center demand, while specialized power rates for most data centers fall short of covering the cost of a new natural gas plant, leaving other customers to pay part of the bill.

Data centers are eclipsing office construction spending and are coming under increased scrutiny for their impact on power grids and rising electricity prices. Specialized power rates for most data centers aren’t enough to cover costs of a new natural gas plant (leaving other customers to foot part of the bill), and in the PJM region, 70% of last year’s increased electricity cost was the result of data center demand. The biggest medium-term risk I can think of for top-heavy US equity markets: China’s Huawei and SMIC pierce the $6.3 trillion NVIDIA-TSMC-ASML moat by creating their own supernode computing clusters and deep-ultraviolet lithography machines of comparable quality. Other recent AI news: Oracle’s stock jumped by 25% after being promised $60 billion a year from OpenAI, an amount of money OpenAI doesn’t earn yet, to provide cloud computing facilities that Oracle hasn’t built yet, and which will require 4.5 GW of power (the equivalent of 2.25 Hoover Dams or four nuclear plants), as well as increased borrowing by Oracle whose debt to equity ratio is already 500% compared to 50% for Amazon, 30% for Microsoft and even less at Meta and Google.

Takeaways by Macro Roundup® AI

  1. In the PJM region, 70% of last year's increased electricity cost resulted from data center demand, while specialized power rates for most data centers fall short of covering the cost of a new natural gas plant, leaving other customers to pay part of the bill.
  2. The author identifies the biggest medium-term risk to top-heavy US equity markets as Huawei and SMIC piercing the $6.3 trillion NVIDIA–TSMC–ASML moat with their own supernode computing clusters and deep-ultraviolet lithography machines of comparable quality.
  3. Oracle's stock jumped 25% after being promised $60 billion a year from OpenAI, which does not yet earn that sum, for cloud facilities Oracle has not built that will require 4.5 GW of power; Oracle's debt-to-equity ratio is already 500% versus 50% at Amazon and 30% at Microsoft.

Related Articles:

  • Fair Shakes — Technology-sector capital spending has accounted for 35%–45% of US GDP growth over three quarters, implying that without it growth would be near 1% given weak consumption. Among S&P 500 companies, capital spending rose 24% and research and development 10%, but the median stock grew both by only 3%–4%.
  • How America’s AI Boom Is Squeezing The Rest Of The Economy — About a sixth of America's 2% real GDP growth over the past year came from investment in computer and communications equipment and data centres, and one estimate puts the artificial intelligence boom's total contribution to growth at 40%. Average electricity bills rose 7%, attributed in part to data-centre demand, while housebuilding and non-AI business investment slumped and real consumption flatlined.
  • Honey, AI Capex is Eating the Economy — Capital spending on AI data centers is around 20% of railroads' peak spending as a share of GDP and is rising quickly, having already surpassed the dot-com era peak in telecom investment. Unlike long-lived rail infrastructure, data centers are short-lived assets requiring frequent hardware replacement, and the capital is being reallocated from other sectors.

AI Summary. Drones are the foundation of hard power in the early 21st century, so a country unable to produce them domestically is at a disadvantage. As electric motors overtake combustion engines as the core technology that makes machines move, the same supply chains and production processes used for electronics can also produce cars, drones, robots, and appliances.

Noah Smith Noahpinion
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Noah Smith argues that manufacturing the “Electric Tech Stack” [lithium-ion batteries, permanent-magnet electric motors, and power electronics] domestically is critical due to the electrification of “everything” and drones being the “key to hard power.”

Does mastering electric technology determine both military and manufacturing strength?

Core argument: Electric motors are overtaking combustion engines as the fundamental technology that makes machines move, meaning the supply chains and production processes used for electronics will also serve to make cars, drones, motorcycles, robots, and appliances.

I want to emphasize two key points: 1. Drones are the key to hard power in the early 21st century. If your country can’t make drones, you’re in trouble. 2. If you have the ability to make drones domestically, you can also manufacture an increasingly large percentage of everything else. In the past, manufacturing industries were very differentiated — making a car, an airplane, a telephone, a TV, and a stove all involved very different production processes and very different supply chains. Being able to manufacture cars didn’t really make you able to manufacture TVs, or vice versa. That’s changing as we speak. Electric motors are overtaking combustion engines as the fundamental technology that makes machines move. This means that the same supply chains and production processes that allow you to make electronics will now also allow you to make cars, drones, motorcycles, robots, appliances, and a bunch of other products.

Takeaways by Macro Roundup® AI

  1. Electric motors are overtaking combustion engines as the fundamental technology that makes machines move, meaning the supply chains and production processes used for electronics will also serve to make cars, drones, motorcycles, robots, and appliances.
  2. Manufacturing industries were historically differentiated, with cars, airplanes, telephones, TVs, and stoves requiring distinct production processes and supply chains, so capability in one conferred little capability in another.

Related Articles:

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AI Summary. Research estimates that rising numbers of workers on H-1B skilled-worker visas accounted for 30–50% of US productivity growth from 1990 to 2010. The estimate comes from comparing economic outcomes in US cities most and least affected by large congressional changes to the annual visa cap.

Michael Clemens Peterson Institute For International Economics
Date Posted:

Btw 1990–2010, the increase in H-1B holders drove 30–50% of all US productivity growth. Michael Clemens argues if changes to the program reduce the number of H-1B visa holders, it will be “a crippling blow to US innovation and productivity.”

How much of US productivity growth came from skilled-visa workers?

Core argument: Research finds that rising numbers of H-1B visa holders caused 30–50% of all US productivity growth from 1990 to 2010, making H-1B labor a crucial factor of production in US economic growth.

H-1B workers are not merely jobholders; their labor is a crucial factor of production that drives US economic growth and opportunity, extensive research has found. From 1990 to 2010, rising numbers of H-1B holders caused 30–50% of all productivity growth in the US economy. This means that the jobs and wages of most Americans depend in some measure on these workers. This is not from a textbook narrative or a computer model. It is what happened in the real world following past, large changes in H-1B visa restrictions. For example, Congress tripled the annual limit on H-1B visas after 1998, then slashed it by 56% after 2004. That produced large, sudden shocks to the number of these workers in some US cities relative to others. Economists traced what happened to various economic indicators in the most-affected cities versus the least-affected but otherwise similar cities.

Takeaways by Macro Roundup® AI

  1. Research finds that rising numbers of H-1B visa holders caused 30–50% of all US productivity growth from 1990 to 2010, making H-1B labor a crucial factor of production in US economic growth.
  2. Congress tripled the annual H-1B visa limit after 1998 and then cut it by 56% after 2004, producing large, sudden shocks to H-1B worker numbers in some US cities relative to others.
  3. Economists traced various economic indicators in the US cities most affected by those visa limit changes against the least-affected but otherwise similar cities, rather than relying on textbook narratives or computer models.

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  • Third-Country Effects of U.S. Immigration Policy — U.S. H-1B visa denial rates rose from about 6% to 16%, and the authors estimate a 10 percentage point rise in denials increases Canadian applications by 30%, roughly one Canadian application per four forgone visas. More exposed Canadian firms increased sales and hired about 0.5 native workers per immigrant.
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AI Summary. The Australian Strategic Policy Institute's Critical Technology Tracker finds China leads in 57 of 64 critical technology categories while the United States leads in 7, and that China surpasses the United States in top-tier scientific publications across all 8 technology domains. In energy and environment China accounts for 46% of top-tier publications versus 10% for the United States.

Justin Riggi Information Technology and Innovation Foundation
Date Posted:
Is Database:
Database

An Australian analysis of the top 10% of high-quality scientific publications found Chinese researchers have surpassed American researchers across 8 critical technology domains.

Is China leading the United States across most critical technology categories?

Core argument: The Australian Strategic Policy Institute's Critical Technology Tracker finds China leads in 57 of 64 critical technology categories across 8 domains, while the United States leads in only 7.

According to the latest findings from Australian Strategic Policy Institute’s (ASPI) Critical Technology Tracker, which evaluates 64 critical technology categories across 8 domains (e.g., artificial intelligence and robotics), show that China leading in 57, while the United States leads in only 7 technology sub-categories. This is concerning because these critical technologies are the key input to advanced sectors that China is quickly overtaking. When evaluating the top 10% of high-quality scientific publications, ASPI finds that China surpasses the United States across all 8 critical technology domains. The gap is particularly pronounced in the energy and environment domain, where China accounts for 46% of top-tier publications compared to just 10% for the United States. Despite U.S. leadership in AI, China produces more top publications, contributing 30% versus 18% for the United States.

Takeaways by Macro Roundup® AI

  1. The Australian Strategic Policy Institute's Critical Technology Tracker finds China leads in 57 of 64 critical technology categories across 8 domains, while the United States leads in only 7.
  2. China surpasses the United States in the top 10% of high-quality scientific publications across all 8 critical technology domains, with the widest gap in energy and environment, where China accounts for 46% of top-tier publications versus 10% for the United States.
  3. China produces 30% of top artificial intelligence publications compared with 18% for the United States, according to the Australian Strategic Policy Institute, despite U.S. leadership in AI.

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